- Ethereum could fall under the $3k psychological support zone soon
- Metrics flashed a strong buy signal, but there’s more that investors need to consider
Lately, Ethereum [ETH] has seen bearish sentiments strengthen behind it. In fact, a Santiment post on X (formerly Twitter) revealed that both Bitcoin [BTC] and Ethereum saw a hike in bear posting ahead of the halving.
Negative engagement on social media saw a positive change on 18 April when BTC bounced to $64.1k and ETH to $3,094. AMBCrypto analyzed other metrics to understand if investors should be buying ETH now.
Drop in gas fee could be a disguised threat
Source: Santiment
AMBCrypto noted that the Open Interest behind Ethereum has slid dramatically over the last ten days. It fell from a peak of $7 billion on 9 April (Ethereum priced at $3638) to $4.6 billion, at press time (Ethereum priced at $2997).
The sharp decline in OI meant speculators feared going long and lacked bullish conviction. It conveyed bearish sentiment. The 1-day RSI was also below neutral 50 for the most part since 18 March. This implied that momentum has favoured the sellers for a month now.
The average fees on the network have also been in decline. A recent AMBCrypto report highlighted that although it is a positive for users, it also points to a drop in demand for transactions on the blockchain.
Addressing the buying opportunity
Source: Santiment
The $3k psychological support zone would have been a fantastic buying opportunity a month ago. It still might prove to be. The 90-day MVRV ratio was below zero at press time, showing an undervalued asset and holders at a loss.
However, the mean coin age has adamantly trended higher for three weeks. Together, they signalled investors to buy Ethereum.
Is your portfolio green? Check the Ethereum Profit Calculator
And yet, the dormant circulation saw a massive spike on 18 April. This highlighted a flurry of token movements and could foreshadow a wave of selling. Moreover, Bitcoin was barely hanging on to the $61k support zone at the time of writing.
Patience and prudence could be extremely beneficial for investors. The likelihood of another sell-off is still high. The possibility of another month or two of consolidation following the halving, in light of recent overheated market conditions, is high too.